Altering financial needs of the sandwich generation

The personal finance space seems to be in a flux. While skimming through advice that is easily available in newspapers and on the Web, I increasingly believe that there is a lot of emphasis on the traditional and the straitjacketed approach. However, there is a new generation of investors that thinks differently. They tend to look beyond buying a term insurance, investing in equity using SIPs, insuring for health, and allocating a small portion to alternate assets. There's a case to be made for this segment of the wealthy middle-agers, who are the new rich.

First, their retirement plan is different. They do not expect to stay with their children, nor will their pride let them depend on the kids in any manner. They are the sandwich generation that doted on their parents, helping them into a new world of prosperity that was denied to them, but consider expecting anything from their own children a sacrilege. They think that they should be responsible for themselves, and the children should indulge their own children in turn.

Post-retirement frugality is not their lot. They believe that they have worked hard to get where they are and should use the time after retirement to travel, bond, indulge and live in comfort. They also want to die with their boots on. For them, retirement is about doing something different, useful, and fulfilling for as long as they can. Given this attitude, the sales pitch that frightens them with inflation numbers is laughable. They need wealth management strategies that preserve, protect and grow the wealth that they have from a position of adequacy, rather than shortage.

Second, their attitude to health is different. They are obsessively focused on good health, with a lifestyle that includes eating well and exercising regularly. Many in this generation have rediscovered walking, running, cycling, trekking and swimming. Yoga and meditation are par for the course. While they have cared for and nursed their parents, they are resolved not to be in a similar condition.

They would want their medical care to be financed from their own funds and will seek hired help if they require any nursing. So, when health insurance is pitched as a must and they are subjected to scare-mongering about how they will have no health cover after quitting their jobs, it does not cut ice with them. Instead, they prefer the idea of a health corpus. They want this amount invested in a professionally managed trust, which can provide funds if and when they need hospitalisation and medical care. This may be better than paying a premium for a health insurance that they may never use.

They are wealthy enough to pay for care, if needed. If they do not use the corpus, it can be passed on as a bequest. If and when living wills are permitted in India, they are likely to ask for medical care to be stopped if the corpus runs out.

Third, they have a different view about parenting and caring for children. They dote on their children and love to indulge them with the best activities, holidays and education. They want to give them good quality education from the best institutions in the world. They like them to have the freedom to choose the career of their choice and be citizens of the world, not compelled to find a job too soon, return to work and live in a place of their parents' choice, or pursue their profession after them. The education funding solution they need are very different.

They want their children to be able to continue with their higher studies for as long as they like, even if something were to happen to the parents. Buying a children's education insurance is juvenile, since it would still need the kids to pursue the insurer for payments. They dislike the religion-based succession planning laws, and tax avoidance structures. Instead, they prefer professional trustees to pay the fees and fund the educational needs without interruption. They want the assets to be transferred to the children at the age of 30, or after the parents' demise, not at 18 years, as many standard structures allow.

Fourth, they view money differently. They grew up in an age, when being wealthy was considered a crime, but are living in modern times, where self-made rich are seen as icons. So, they are not apologetic about their earnings or assets and like inclusive wealth-generation models. The power of earning what they are worth, creating wealth through innovation, and enjoying the freedom of allocating it the way they want, is preferable to them.